Jobless claims return to near seven-year low

Economists generally expected initial unemployment claims to inch higher in the new Labor Department report. Fortunately, they were mistaken.

The number of people who applied for unemployment benefits in the first week of July fell by 11,000 to 304,000, putting initial claims close to a seven-year bottom again and offering more evidence that U.S. hiring has accelerated while the rate of layoffs remains low. Economists surveyed by MarketWatch had expected claims to total 320,000 on a seasonally adjusted basis.

The average of new claims over the past month, meanwhile, declined by 3,500 to 311,500, the Labor Department said Thursday. The monthly figure, which is also just a hair above a seven-year low, offers a better look at underlying trends in the labor market.

To reiterate the point I make every Thursday morning, it’s worth remembering that week-to-week results can vary widely, and it’s best not to read too much significance into any one report.

In terms of metrics, when jobless claims fall below the 400,000 threshold, it’s considered evidence of an improving jobs landscape, and when the number drops below 370,000, it suggests jobs are being created rather quickly. At this point, we’ve been below 330,000 in 15 of the last 18 weeks.

Above you’ll find the chart showing weekly, initial unemployment claims going back to the beginning of 2007. (Remember, unlike the monthly jobs chart, a lower number is good news.) For context, I’ve added an arrow to show the point at which President Obama’s Recovery Act began spending money.